CFSP in the News

This article explores planned large-scale infrastructure -- including high speed rail -- and stimulus spending in Thailand. Opponents of the program have called for fiscal prudence and have questioned the amount of public debt it would require. CFSP Faculty Director and MIT Professor Robert M. Townsend points out, however, that average debt-to-asset ratios are low and have been decreasing since 2006, a fact which suggests that concerns about spending are overstated.

Diana Baide of Microcapital.org focuses on the staggering growth rate of mobile banking in Kenya, known as M-PESA. The reach of M-PESA is becoming increasingly widespread, reaching households, rural areas, and women as part of the clientele. The impact of this booming shift in banking is the topic of research for Billy Jack of Georgetown University and CFSP member Tavneet Suri of the Massachusetts Institute of Technology (MIT). “Mr. Jack and Ms. Suri concluded that the program has contributed to better household financial management and has the capacity to partially protect users from the negative consequences of job loss or business failure.”

Jake Kendall, Program Officer for the Bill & Melinda Gates Foundation, highlighted the work of Tavneet Suri who, along with Billy Jack of Georgetown, has been actively studying the impact of mobile banking in Kenya. Kendall points out that some skeptics wondered if mobile banking was truly living up to its potential to reach the poor and unbanked, substantially improving their lives and providing avenues to save and store money. According to an excerpt from the work of Suri and Jack: "We can now put to bed the question 'Will M-PESA reach the poor?' It has." CFSP is supported by a grant to the University of Chicago from the Bill & Melinda Gates Foundation.

Tim Ogden, of Philanthropy Action, highlighted CFSP member Chris Udry and his compelling work on the use of microinsurance. Ogden noted the various benefits of holding microinsurance, which can provide aid to the poor in developing countries during various shocks, but noted that microinsurance has often struggled to find eager buyers. Studies like Udry's in Ghana suggest promising results for the poor buying into plans. “The really exciting thing about Udry’s research is the significant benefits participants achieved,” writes Odgen.

In his blog post, Rupert Baines of ECN magazine tells the story of a rising paradox in many developing countries across the globe. Countries like Ghana, that exhibit many of the telltale signs of poverty, are also assuming an astonishingly rapid modern identity with the advent of mobile banking. Baines, while on vacation in Ghana with his family, observed this phenomenon and took note of how it has impacted daily life for business owners. A similar mobile banking system in Kenya, M-PESA, has been the focus of CFSP member Tavneet Suri’s research, which was highlighted in his post. The presence of M-PESA has changed the way Kenyans do simple transactions, such as transfers. "In these sorts of economies, there's not much of a bank presence, but money transfers are still important," notes Suri. "People do them all the time.”

A cellphone-based cash transfer system has changed the way Kenyans handle their finances. But what does it mean for Kenya's economy — and the developing world? Peter Dizikes takes a closer look at CFSP member Tavneet Suri’s research in Kenya. (Image Christine Daniloff/MIT News)